DEFA picks natgas bidder for 2016 supply
The state-owned Natural Gas Public Company (DEFA) has chosen the supplier of an estimated 0.7-0.95 bln cubic metres a year for use in power generation and it will commence negotiations with the preferred bidder to conclude on a final pricing, possibly by the end of July.
Cyprus’ gas needs have been estimated at 1 bcm a year as the public Electricity Authority of Cyprus seeks cheaper and cleaner alternatives to diesel fuel.
DEFA said its board “examined and completed the evaluation of the latest revised commercial and financial proposals received from bidders earlier this month” in response to an invitation for bids issued in January 2014.
It said it evaluated the proposals and will inform the Minister of Energy, Commerce, Industry and Tourism of the results.
“DEFA is bound by confidentiality agreements and no more information will be released at this stage,” it said.
The call for the tender was initially issued in October 2013 but revised and re-issued in January 2014.
Reports suggested that the front-runners were the Greek consortium M&M as well as the Dutch Vitol Group, co-owner of the 300 mln euro VTT storage terminal in Vassiliko.
The DEFA tender called for the supply of natural gas to the Cypriot market through two delivery routes – one in early 2016 and the other no later than the second half of 2017.
The interim supply is expected to plug a five year gap from current needs to the export of natural gas from the Cyprus offshore gasfield of ‘Aphrodite’ operated by US-based Noble Energy and Israeli partners Delek and Avner.
Delek, a partner in the adjacent Israeli offshore gasfield of Leviathan was also an earlier bidder, as was Azerbaijan’s stateowned Socar.
Cyprus seems to have abandoned plans to build a land-based regassification plant to utilise the output from Noble’s ‘Aphrodite’ gasfield, while the operator is seriously considering a floating terminal on-site from where it will export the gas to Cyprus and probably Egypt.
The gasfield, with estimated reserves of 4.5 tcf, was declared ‘commercially viable’ by Noble last week, while other gasfield operators Total and ENI-Kogas have, for now, halted exploration efforts after initial drills did not justify further investments, particularly in the current environment of crude oil prices in the range of $60 a barrel.